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Monday, 18 July 2016

The Redistribution of Humiliation

The recent EU referendum in the UK has drawn a great deal of attention to voters who had previously been ignored. Communities left behind by the 21st Century, especially in the North and East of England, voted strongly to leave. The referendum result will do nothing at all to help these people, as the economy slows and pressure is put on government finances, but it is still important to consider what can be done to address their problems.

One problem is inequality of wealth. In theory, this is simple to solve, we just give people money. If we don’t have enough money to give people, this is unfortunate, but long term growth, trade and neoliberalism will mean there is more to go round. This misses the bigger picture though. People are very poor at identifying disparities in wealth, their perceptions are very far from reality, and so addressing this is unlikely to allay frustrations. When people talk about inequality in society, they are really talking about the hierarchy of status.

Status, like pornography, is hard to define, but you know it when you see it. It is not the same as wealth: lotto lout Michael Carroll was rich, but not at all high status. It’s also not the same as class: Alan Sugar is working class in his background and mannerisms, but still high status. Status is not the same as intelligence: Neil DeGrasse Tyson is a very intelligent man, but is still clearly a loser. Status is also not the same as power: Andrea Leadsom could have become one of the most powerful people in the world, but will never be high status. It relates to all of these things, but really, status is positional respect. It is the esteem in which you are held by society, especially by those who are themselves held in high esteem.

Redistributing wealth does little to address inequality of status, and may even make the problem worse. While making money yourself confers status, being given it doesn’t. In fact, being able to afford to give a handout is a costly signal of your own strength, whereas accepting a handout incurs reputational costs. The hierarchy is reinforced. In the past, the government has managed to work around this by disguising the handouts. They use white lies like the contributory principle to justify tax credits and pensions, or more roundabout ways, like the Thatcher government’s subsidised sell off of council housing. While this works well, people living off the state without realising it don’t tend to vote in favour of redistribution, and erroneously take out their frustrations on even lower status people for whom it is more obvious.

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Disparities in status across society, I think, becoming larger and more obvious. Fifty years ago, talented people from poorer backgrounds were often trapped there. While this was bad for them, it had some good effects. The brightest and best create a social surplus, in terms of organising informal institutions, and therefore help build a sense of community. In even the most deprived areas, there were smart leaders. Status, therefore, was more evenly distributed between geographic and socioeconomic groups, with local hierarchies and high status role models.

Now, these people leave at 18 for university. While this is great for the individual, they are able to escape their relatively deprived background, and good for society, as they will likely contribute more broadly, it may not be good for their home town. Meritocracy siphons off the brightest young working class people and makes them middle class, with university teaching them necessary etiquette. Most, once they’ve seen what the rest of the world has to offer, don’t return. ‘Elites’, therefore, are drawn from many sections of society, but are united by high levels of intelligence and education. Their friend groups are elite-only, with the internet helping they to secede from the rest of society, wherever they are in the world. The social surplus they create is captured and kept within their circle. Society, therefore, becomes more starkly sorted by levels of status.

You can’t grant status from above, it has to be seen as earned. Directly redistributing status is really difficult, and may be one of the most important long term questions for human civilisation.

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To really understand how to solve this, we have to take a detour and explore the clowning culture of the Pueblo Indians in the southwestern United States. Here, clowns take place in periodic rituals, which occupy a space between a circus show and a religious experience. Members of the community watching are systematically picked on and humiliated. The performers simulate copulation in the streets, bowls of urine are thrown around, people are hit with phallic objects, kidnapped and thrown in the rivers. The religious functions of the ceremony are lampshaded and mocked as it is happening.

There are two ways in this relates to our theme of status. The first is that the clowns are anonymous, hiding behind masks and outfits. They therefore have no reputations of their own to lose or gain. Once wearing the clown outfits, participants exist outside of hierarchies, and can’t be held responsible for their actions afterwards. The second is that their actions are redistributive. They are equal opportunity offenders, targeting everyone from children to tribal chiefs. This is levelling, as the chief has far more status to lose. The controlled bout of anarchy also holds a discipline function. Perceived miscreants can be targeted, and the event shows how society can collapse once people stop following rules.

The brexit vote has a similar function. Its goal is not to materially improve the lot of the working man, but to humiliate his betters. Now everyone has been brought down to his level, grappling with vast systems they don’t understand or control. A supreme act of political and economic vandalism to upend the UK’s status hierarchies. Nigel Farage isn’t a potential leader, he doesn’t have the capacity, and has never been elected into the formal hierarchies of Westminster. Instead he’s a clown, and the voters chose to hit David Cameron with a massive, inflatable, penis-shaped slap-stick.

This energy needs to be channelled in a safer way. If the people are going to elect governments, they must have a better outlet for dispensing humiliation, otherwise they vote to dole it out and do immense damage to the country in the process. The nearest modern day equivalent to the clowns are obviously comedians, but this offers us little help. The vast majority of stand ups working today on UK TV are offensively unchallenging to the prevailing political order, enforcing dull liberal social norms, but doing little to seriously humiliate those in power or redistribute status. Unfortunately I’m not able to offer any more substantive proposals, but if there is hope, it lies in the trolls.

This is a really thought provoking post, thank you. But I think this explanation doesn't sit well with two of the other cross sectional voting patterns of note:

* Age: older people more likely to vote leave, but these same older people less likely to be subject to the "social sorting" which you argue breeds resentment which drove the leave vote.

* Scotland and Northern Ireland: Why wouldn't the same channels for resentment be present (or as important) here as they were in England and Wales? (I think this one is easier to understand than the age one).

Also, it's interesting that a majority of leave voters want to cut immigration substantially. This could be consistent with your status theory (many people feel that immigrants should be lower priority than natives for public services, for instance). But it's also consistent with cultural explanations or arguments based on (absolute, rather than relative) economic self interest if you think that low-skilled immigration depresses low-skilled wages.

This is a common myth. Essentially nobody can bounce the government's cheques. If the Treasury wants to spend, the cheque clears. The only constraint is the *real resources* of the country. The 'funding' comes from spending the money.

Here is the legislation showing the government runs an unlimited intraday overdraft:

"18. The net surplus or deficit in the NLF is automatically balanced to zero each day by a transfer to or from the Debt Management Account operated by the Debt Management Office (DMO). The DMO's cash management objective is each day to balance this remaining position on the NLF. It does this by issuing Treasury Bills and by borrowing or lending in the sterling money market during the day. To achieve this objective the DMO needs reliable forecasts of each day's significant cash flows into and out of central government, and up to date monitoring information on actual cash flows as they occur. For cash management purposes the flows that matter are those which cross the boundary between the Exchequer Pyramid accounts at the Bank of England and accounts elsewhere (ie cross the outer black line of the chart annexed to this memorandum).

19. When government is a net lender on a particular day because, for instance, tax receipts exceed spending, the DMO lends the cash back out into the market. The effect is to balance up cash holdings across the banking sector because, if government has received more cash on the day than it has spent, the commercial banking sector will have an equal and opposite deficit.

20. The DMO has put arrangements in place with the Bank of England and the main settlement banks to ensure that its position is balanced at the end of each day, even when there have been very late changes in the forecast of government cash flows on the day. The DMO also maintains a small (£200 million) balance at the Bank which acts as a buffer, eg in the event of a change in the net government position following the final reconciliation of the government accounts in the Exchequer Pyramid after the end of each day."

Government spending always works by crediting bank accounts (creating money.) The government’s spending finances the non-government sector’s payment of tax, accumulation of currency, and purchasing of bonds.

To further this, all government spending comes back as tax if there is no saving in the spending chain. This shows that is a sufficient (but not necessary) condition is that if there is no saving in the spending chain there is no deficit. Think about a credit card analogy with the government spending on its credit card. You might get a measly percentage when you spend money at Tesco, but when the government spends at Tesco not only does it get a percentage, but when Tesco pays its staff the government gets another percentage, and then when the staff buy beer at the pub the government takes another chunk. And so on until the initial government spending turns entirely into cashback.

For the government it is a cracking cashback deal - in an unlimited time period for every £100 it spends, it always gets £100 back in cashback. For everybody else it is known as taxation and besides death it is the only certainty in life.

So with this in place the only time they will run a balance on the credit card would be if people out there haven't spent everything they've earned. In other words a balance on the credit card is caused by people saving.

It is slightly more complex than this as of course people and companies are spending savings and banks are lending (and the government lets you pay your taxes via the banks and offer them access to reserves at the Discount Window.)

In conclusion, the deficit is not under control of the government as it depends on private sector decisions to save, spend and borrow.

People's anger should be directed towards lack of true of full employment and shit jobs.

The government can always boost spending and cut taxes to offset declines in 'corporate confidence' regardless of the cause.

For example they could implement a Job Guarantee - a job offer fitted to the person for all at the current minimum wage for the public good that eliminates illegal jobs below the minimum wage and reduce unemployment:

http://www.3spoken.co.uk/2015/11/job-guarantee-jobs-for-people.html

The idea is only aspirational at the moment. We would need to sample local areas to find out what work needs doing.

Anything that would be helpful for the public good could be avaliable - for example open source programming, social care, care for the elderly, community musicians, and so forth.

That is possible with controlled borders, or if open borders are condition on a country introducing a similar scheme.

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